A recent survey conducted by Royal LePage Canada, with over 750 Real Estate professionals across Canada, confirmed what our years of experience has taught us: certain renovations and upgrades can be a great way to boost the value of your home. Kitchen renovations came out the clear winner, while bathrooms and basements tied for second in maximizing the return on investment (ROI) when looking at improving or upgrading your home.
Whether you’re planning on selling soon, or you’re just settling in, here is a quick guide for maximizing your home improvement ROI which can help you avoid making fundamental mistakes. We’ve seen it all - the good, the bad, and the just plain UGLY!
Homes with new kitchens and bathrooms command a higher selling price; however, make sure that you choose materials and colours that will appeal to a wide range of buyers. Not all renovations are created equal.
So what exactly should you improve when you redo your kitchen or bathroom? For kitchens, think traditional. All-wood, white shaker style cabinets (white is timeless and appeals to many buyers), commercial-looking appliances, natural wood or stone floors, and stone countertops.
For bathrooms, walk-in showers have replaced whirlpool tubs as the must-have feature, and are a great way to add a wow factor to an ensuite bathroom. But think twice about getting rid of the tub all together, particularly in the family bathroom, as buyers with young children likely cannot get by without it.
So when should you renovate your kitchen and bathrooms for the greatest return? Just before you sell! These are high-traffic areas, subject to wear-and-tear, and they are likely to receive sharp scrutiny from a prospective buyer. Moreover, kitchen and bathroom décor trends change every five to ten years, and your upgrades may seem a bit dated if they’re twelve years old.
New windows and exterior doors, new roofs, improved insulation and efficient heating systems may not provide the biggest boost to your home’s value – the experts reckon you won’t increase that value by more than 10% with any amount of these upgrades. But buyers do expect systems in the home to be in good working order. If you have a fancy new kitchen but your roof is leaking, buyers will most likely not pay the extra premium for the new kitchen. Maintenance can chew up a lot of cash quickly, and buyers are afraid of that. The key to good maintenance is to plan it out gradually and consistently, so that problems don’t stack up all at once and end up costing a fortune.
Most buyers have a limit on their budgets. If they know they don't have to spend money on the upkeep of basic systems, then they're more likely to buy the well-maintained house and consider upgrading the kitchen or bathrooms themselves, in due time.
For eco-friendly and energy-efficient upgrades, the real return on your investment will be in your energy savings. And, as long as items such as windows and heating systems are in good working order and not nearing the end of their usable life, prospective buyers won’t be overly concerned. The longer you live in your energy-efficient home, the more you will benefit from the investment you made.
Don’t count on outdoor improvements such as landscaping, a new swimming pool or back deck to increase your home’s value in any significant way.In Canada, the majority of homeowners can only utilize the backyard for half the year. If you’re selling your home in the winter months, it’s difficult to showcase all that work. Families with young children are sometimes inclined to avoid homes with in-ground pools for safety concerns, and some individuals avoid pools altogether because of the maintenance involved. That said, in certain market segments, a well-landscaped yard complete with an in-ground pool is a great selling feature, particularly if the home is being marketed during the summer months. Look to recoup about 75%- 95% of the cost if selling in the summer. So, don’t put in a pool to sell; do it if your family will enjoy its benefits and make your summers more fun at home.
If you're thinking about spending a bit of money on home improvement projects this year, keep a few things in mind: what you'll get back on your investment depends on the value of your home and those in your immediate neighborhood, the housing market where you live, how soon you sell after making improvements, and the quality of the project itself. Installing a $50,000 kitchen in a $250,000 house, for example, simply does not make sense. Also, don’t expect a kitchen or bathroom that was renovated over a decade ago (even if you think it still looks *fantastic*!) to fetch the same return as a brand new one. So choose your projects - and when to time them - wisely.
The majority of us hire professionals to help us manage our financial assets more strategically, but very few of us have a plan or seek advice when it comes to our own homes. Your home is probably your greatest asset, and just like your other investments, it deserves a systematic process for its development, maintenance and upgrading, in anticipation of it being sold in a cost-effective manner.
Most people don’t realize that Team Broady offers services to help homeowners regularly review the value of their homes as well as see where the market is going. So if you’re someone who thinks of their home as an investment, and are interested in meeting with our team to learn more, don't hesitate to contact us.